Dow, S&P 500 extend string of record closes; VIX up

The Dow and S&P 500 ended at record highs again today as more deal news raised enthusiasm for stocks, though Wall Street's fear gauge advanced.

It was a fourth straight record closing high for the S&P 500 and a third for the Dow. The gains, though, have been moderate in most recent sessions and volume lighter than average.

The CBOE Volatility Index rebounded after falling on Friday to its lowest level since February 2007. Wall Street's "fear gauge" rose 3.9 percent to end at 11.15. The VIX remains at nearly half of its historical average, which some analysts worry is a signal that the market is not fully accounting for issues that could derail the rally.

Monday's merger activity prompted investors to buy some stocks. Merck & Co said it has agreed to buy Idenix Pharmaceuticals Inc in a deal valued at about $3.85 billion.

Milan's FTSE MIB ended up 0.8 percent while Spain's IBEX rose 0.9 percent, building on a rally last week that was driven by the European Central Bank's new measures.

The euro zone's blue-chip Euro STOXX 50 index rose 0.3 percent to 3,305.26 points, close to a six-year high and setting a new peak for 2014.

The pan-European FTSEurofirst 300 index rose 0.4 percent to 1,393.71 points, also setting a new high for 2014, while Germany's DAX closed up 0.2 percent at 10,008.63 points - near a record high of 10,013.69 points set on June 5.

Meanwhile, Japanese shares climbed to a three-month high following a solid US May jobs report, with investors rotating into growth-sensitive stocks from defensive ones.

The benchmark Nikkei gained 0.3 percent to 15,124.00, its highest closing level since March 11.

The index has risen nearly 500 points, or 3.4 percent, over the past six trading days, raising concerns that the market may be overbought in the very near term.

But investors seem relatively bullish on the market, rotating into high beta shares - those with high volatility - from defensive shares. Real estate companies and warehouse and port operators were the top performing sectors on the day.

The broader Topix was little changed at 1,234.78 in thin trade, with only 1.42 billion shares changing hands, the smallest number since April 18.